1. ) In October of 2017, Tommy and Tammy, husband and wife, sold for $940,000 their (only) residence that they had purchased in 1999 for $400,000 paying $300,000 in cash with a $100,000 mortgage from ABC Bank. They lived there the entire time they owned the home, and they made repairs to the electric and plumbing during their 10-year ownership totaling $40,000. What, if any, is their recognized gain or loss to be included on their jointly filed Form 1040 for 2017?

a. $400,000

b. $0

c. $500,000

d. $40,000

e. None of the above is correct

2. Gain, in certain cases, may be treated as capital gain in which of the following situations?

a. Upon recognition of a nonbusiness bad debt

b. Upon the sale of inventory

c. On the sale of Section 1231 property

d. In none of the above situations